go through Luisa Maria Jacinta C. Josen, Senior Reporter
International currency Fund (IMF) cuts its overallPesticide Products (GDP) Growth Forecasts for the Philippines from this year to the next reflect the increased global uncertainty Arising from US tariff policy.
In its latest World Economic Outlook (WEO), the IMF lowers its GDP growth rate to 5.5% from 6.1% this year in the Philippines Projected in its January update.
It also lowered its forecast for 2026 to 5.8% from the previous 6.3%.
By 2026, these targets will be lower than the government's 6-8% growth target this year.
The IMF says its forecast takes into account weaker growth in the Philippines in the fourth quarter and an external headwind of enhanced trade Tension and policy uncertainty.
“Reduced revisions in growth in 2025 and 2026 have been observed across the region and globally, reflecting recent external developments,” an IMF spokesperson said in an email.
These include “the direct impact of higher tariffs on exports of Phillipine goods to the United States, the downward revision of trading partners’ growth and the impact of higher uncertainty and financial tightening”.
U.S. President Donald J. Trump announced reciprocal tariffs on nearly all of his trading partners on April 2, with a benchmark rate of 10%.
Although most of the higher reciprocity tariffs have been suspended until July, the 10% tariff on the baseline is in effect.
The Philippines' export rate to the United States is 17% higher, the second lowest tax rate in Southeast Asia.
The IMF said its WEO forecast was based on information available on April 4 and suffered “significant uncertainty.”
However, the International Monetary Fund said the Philippines economy is still considered to be somewhat resilient.
“Despite the environment being more difficult, growth in the Philippines is expected to remain relatively strong in 2025,” it said.
The IMF's forecast for the Philippines is to be the fastest growing economy in emerging and developing Asia this year, second only to India (6.2%).
As Southeast Asian countries are one of the most affected by U.S. tariffs, the region is expected to grow 4.5% this year and 4.6% in 2026.
In Southeast Asia, the Philippines has the fastest GDP growth rate this year. It leads Vietnam (5.2%), Indonesia (4.7%), Malaysia (4.1%) and Thailand (1.8%).
“On the bright side, recent legislative reforms may help accelerate the implementation of domestic infrastructure projects, including through public-private partnerships, and lead to higher foreign direct investment (FDI) and investment,” the IMF said.
It added: “In terms of growth drivers, domestic consumption remains a key driver of growth and is expected to be supported by lower inflation and low unemployment.”
Meanwhile, the multilateral agency said that the Philippines' headline inflation is expected to average 2.6% this year and 2.9% in 2026, far exceeding the central bank's 2-4% target band.
“The title inflation forecast for 2025 has been modified to 0.2 percentage points (PPT) to 2.6% relative to January’s WEO.”
This reflects “lower than expected inflation in the first quarter, as well as a revision of global fuel and food price forecasts.”
The latest data from the local statistics bureau showed inflation fell to 1.8% in March, the slowest pace in nearly five years. This brought the average inflation rate to 2.2% in the first quarter.
Considering the risks, the central bank believes that inflation will be 2.3% in 2025 and 3.3% in 2026.
The IMF said the risks of inflation outlook are “broadly balanced”.
“On the bright side, the potential damage to global supply chains and trade restrictions could exacerbate the inflationary pressure on imports, and risky shocks could lead to currency devaluation.”
“The exposure of the Philippines to extreme climate events also presents additional inflation risks. On the downside, the risk of weaker global demand prospects may present deflation risks, including through lower commodity prices.”
Meanwhile, the International Monetary Fund said that Bangkok Lineup NG Pilipinas (BSP) has room to further reduce interest rates and “resolutely turn to a neutral stance.”
“Since inflation is expected to maintain the 3% target of BSP, this is good inflation expectations and there is room for a more accessible position as the expected output gap is widening.”
Earlier this month, the Monetary Commission resumed its cutting cycle with a 25 benchmark point (BP) reduction rate, bringing the benchmark to 5.5%.
BSP Governor Eli M. Remolona, Jr. It said they may continue to continue lowering rates this year in “baby steps” or 25 basis points increments.
There are four more Monetary Commission policy meetings this year, and the next one will be held on June 19.
“In prevailing uncertainty and upward and downside risks of inflation, data-dependent approaches and clear and effective communication around policy settings are very important for managing expectations and clear BSP response functions.”
“Negative Growth Impact”
Meanwhile, the IMF expects global growth to slow to 2.8% this year and to recover to 3% in 2026, reflecting “the direct impact of new trade indicators and their direct impact of increased uncertainty and worsening sentiment through trade chain spillovers.”
The new forecast is below the 3.3% forecast for two years of WEO update in January.
In its latest report, the IMF said trade uncertainty “spicks to unprecedented levels.”
It added: “The rapid escalation of trade tensions and extremely high policy uncertainty is expected to have a significant impact on global economic activity.”
The U.S. is expected to grow by 1.8% this year, 0.9 percentage points lower than previous forecasts, “due to greater policy uncertainty, trade tensions and high demand momentum.”
“Tariffs are expected to grow in 2026 (US) and are expected to be 1.7% in modest private consumption,” the IMF said.
The IMF also lowered its forecasts for Canada, Japan and the UK.
For China, it has lowered its growth outlook to 4% this year due to the impact of U.S. tariffs. It also lowered its forecast for China in 2026 to 4% from the previous 4.5%.
It added that tariffs alone and the consequent countermeasures were “a major negative shock to growth.”
“The unpredictability of these measures is also negatively affecting economic activity and prospects while making them more differentiatedfAssumptions made more than usual will constitute an assumption that is internally consistent and timely prediction basis. ”
The IMF said global inflation is also slower than initially expected.
It also marks the “strengthening downside risk” of global output.
“Intensifying trade wars, coupled with higher trade policy uncertainty, may further reduce near- and long-term growth, while erosion policy buffers weaken resilience to future shocks.”
“Diversity, rapidly shifting policy stance or worsening sentiment could trigger additional repositioning of assets beyond the announcement of U.S. tariffs on April 2 and a sharp adjustment to exchange rates and capital flows, especially for economies already facing debt trouble.”
The International Monetary Fund (IMF) said it is necessary to “clear and coordinate”.
“Countries should constructively promote a stable and predictable trade environment, promote debt restructuring, and address common challenges.”
It added: “At the same time, they should address domestic policy and structural imbalances to ensure their internal economic stability. This will help rebalance the trade-offs of growth inflation, rebuild buffers and revitalize the medium-term growth outlook, and reduce global imbalances.”
